Very good piece in today’s “The Sheet” about the upcoming replacement of CBA’s core banking system. Correctly, it is entitled “Adventures with core systems: part I”. The belief that most banks in Australia need to replace their core systems reasonably soon is a strong one – and in most cases justified. The problem, of course, is also well known.
Core system replacement is expensive, risky and time-consuming. It is a huge change management task, with most of the bank’s staff well trained on the old one. For example – I dropped into my bank to close an account a few days ago. Sitting down with my “client adviser” she opened a web browser to check on my balances and see what I wanted to do. To do the bit she would need to show me she left it in the browser. However, as soon as she wanted to actually do anything she opened up a terminal emulator. I peered around and asked why she had not done it in the browser.
Her response was simple – the browser allowed her to do it but she was much faster on the terminal. Essentially, although the terminal emulator was lousy to look at it was effective and fast.
At that bank, and almost every one I have ever been into the story is the same – bank staff are comfortable with the old systems. Despite the fact they are built on technology that was outdated 20 years ago they still work. Staff are familiar with them. Anyone seeking to replace the system not only has to make it work from a technological viewpoint – but it also has to work in the organisation.
In comments, feel free to add in your favourite banking core system replacement story. Ones from Westpac are particularly invited – the one that was particularly successful a few years ago sounds good. Operational risk events can also be pretty funny – if you are not in the middle of one.
Give “The Sheet” a read too. if you are interested in banking activity in Australia it is worth it.
3 comments
3 July, 2008 at 21:41
Martin Davies
The short cuts on the teller terminal is one thing. One has to consider some of the greater issues here, the CBA core banking system is decades old and is reaching a point where there is a shortage of trained staff who can look after the beast any more. Really who programs in COBOL these days, actually the number of readers of this blog that actually know what that is might even be limited.
Then of course these archaic facilities have other issues outside support, namely that the world around them evolves from the introduction of electronic banking (which isn’t particular novel) to the addition of new products, all of which requires workarounds and wrapper interfaces. In the end you have one core banking system and perhaps 5000 complex interfaces all of which confusticate the delivery of a continual service to customers.
At some point someone has to clean up and streamline this service to reduce potential error even though such an act puts the entire system at risk.
4 July, 2008 at 00:55
Andrew
Absolutely Martin – how many techies really want to learn COBOL today? The problem I was looking at though was the change management issue. Get that as close to right as possible and you have a chance. Fail and while you have a wonderful system your staff and customers are all umm… really annoyed.
7 July, 2008 at 20:39
Jacques Chester
According to the article the current system is in assembler. Cobol is a bit of a luxury by comparison. :)
The biggest mistake they can make at this point is to outsource something of this size. It never works. IBM, EDS et al bill each programmer at $200/hour then go and pick up any old person they can find on job boards and pay them $30/hour.
For a bank I would argue that IT is now the central function of the organisation around which everything else revolves. It deserves the requisite investment, patience and focus.
Still, I’d be shorting CBA stocks. Large projects of this sort have a historical 70% failure rate.